– total oil withdrawals for the year now amount to US$550M
The People’s Progressive Party/Civic (PPP/C) government has made its second withdrawal from the Natural Resources Fund (NRF) for the year, in keeping with the parliamentary approval that was granted for total withdrawals of US$1.586 billion in 2024.
In a statement on Monday, the Finance Ministry announced that a total of US$300 million (equivalent to G$62.394 billion) was withdrawn from the NRF on May 14, 2024. This follows the first withdrawal of $51.9 billion in March 2024, withdrawals that have already been approved in the National Assembly.
“In accordance with this approval, the Government of Guyana has made its second transfer for 2024, totaling US$300 million (equivalent to G$62.394 billion) from the NRF on May 14, 2024, to the Consolidated Fund.”
“This transfer brings the accumulated withdrawals to date in 2024 to US$550 million (equivalent to G$114.388 billion) within the total of US$1.586 billion (equivalent to G$329.9 billion) approved to be withdrawn in 2024,” the Ministry further said.
This sum, which is the equivalent of US$1.5 billion, marks the highest total of approved withdrawals since oil production started in 2019 and oil funds began to be used in the national budget in 2022.
The Ministry of Finance
In 2022, the use of oil funds had constituted 23 per cent of the national budget, while in 2023 oil funds had constituted 26 per cent. This year’s budget was $1.146 trillion, which means that oil money will constitute roughly 28 per cent of the 2024 budget.
Back in December 2021, the Government amended the NRF Act to bring greater transparency and accountability in the management of Guyana’s oil resources, including the requirement of the Government to seek annual parliamentary approval for withdrawals from the NRF as stated in Section 19 of the NRF Act 2021.
Under that provision, as part of its consideration of the budget process, the Parliament had approved a total of $208.9 billion (equivalent to US$1.002 billion) to be withdrawn from the NRF in 2023. But during his presentation of the $1.146 trillion 2024 Budget in January, Finance Minister, Dr Ashni Singh pointed to the need for an “optimal and dynamic financing mix”.
“Our government will be proposing… a revision to the NRF withdrawal rule which, once approved, will result in an upward revision to the NRF withdrawal amount to take effect from this fiscal year.
“The revised withdrawal rule will retain the important feature that as production and revenue ramp up further, an increasing share of the inflows into the NRF will be saved relative to the share transferred to the Consolidated Fund to finance national development priorities,” he had explained, adding that this proposal would be placed before the National Assembly for consideration and approval.
The funds in the NRF have their origins in the oil-rich Stabroek Block offshore Guyana, where US oil major ExxonMobil and its partners – Hess Corporation and China National Offshore Oil Corporation (CNOOC) – are producing light sweet crude using the Liza Destiny, Liza Unity, and more recently, the Prosperity Floating Production, Storage and Offloading (FPSO) vessels.
In 2022, for the first time, Guyana had used oil funds to finance a national budget. In fact, in 2022, the Government withdrew a total of $126 billion (US$607.6 million) in three tranches from the NRF which went towards financing Guyana’s national development plans.
In 2023, US$1.002 billion was withdrawn to finance national development priorities. The last of eight withdrawals for last year was made on December 27, 2023 from the NRF to the Consolidated Fund, to the tune of US$152.1 million (equivalent to $31.6 billion).
